It is customary for the conclusion of each year to be marked by predictions
about what is in store for the New Year. Given the volatility of politics
during the last decade, observers should be reluctant to play the role
of political Nostradamus.

The year 2001 ends with George W. Bush enjoying unprecedented approval
ratings and leading an apparently successful anti-terrorism campaign.
Yet Republicans have lost governor's races in New Jersey and Virginia,
states won by the GOP since 1993, and a close mayoral election in Houston.
The only significant Republican victory was Michael Bloomberg's stunning
upset in the race for mayor of New York City, hardly a major boost for
the right given the billionaire's long-standing liberal sympathies.

Notwithstanding President Bush's razor-thin 2000 presidential victory
and his ability to unite a great majority of Americans behind him following
the terrorist massacres of September 11, American conservatives have to
some extent suffered the plight of the right throughout the Western world.
As the advocates of democratic socialism we now commonly call left-liberals
have accepted in some degree the market economy, they now effectively
present themselves as more compassionate custodians of capitalism. Leaders
like Tony Blair, Jean Chretien and Bill Clinton do not preach unadulterated
socialism and are willing to allow the private sector to deliver services
during some instances of public sector failure.

By resisting the right's characterization of them (and to a large extent
adopting their policies), the left has revived its political fortunes
only a few short years after conservative commentators were triumphantly
writing their opponents' obituaries. So we see Democrats effectively resisting
Republican calls for further tax-rate cuts even as such reductions are
more economically justified with each passing quarter (in the last quarter,
the economy contracted at a 1.3 percent annual rate). Democrats still
criticize the Reagan tax cuts of the 1980s and warn that President Bush's
tax policy will similarly cause deficits and other economic unpleasantness,
yet none of them dare call for returning to pre-Reagan tax rates.

Indeed, our present situation with a majority of the federal tax burden
being paid by a minority of taxpayers empowers the left. Any meaningful
tax reduction with any prospect of improving investment returns or increasing
incentives for productive economic behavior can easily be presented as
a "tax break for the wealthy." Consider that one-third of the
incomes taxes that prop up the federal welfare state are supplied by the
top 1 percent of taxpayers. Though a dangerous situation for both the
economy and the rule of law, a country in which the majority can vote
itself benefits paid for by the wealth of the minority is a boon for statism.

Before the Reagan administration, middle and working-class families were
constantly pushed into higher tax brackets by inflation, a form of bracket
creep that resulted in unlegislated tax increases. Marginal tax rates
were well above today's top statutory rate of 39.6 percent. Today, tax
rates are lower (thanks mainly to conservative policies) and "real
income bracket creep" is a less obvious phenomenon - being penalized
for progress by having reasonable gains in income push your family into
a higher tax bracket is economically counterproductive, but not as painful
as higher taxes accompanying stagnant or declining real income. This makes
tax rate cuts seem less urgent and the Democratic argument for "fairer"
targeted tax cuts to benefit "working families" seem more reasonable.

Liberals governments continue to expand the role of the state, but do
so more incrementally, with promises of efficiency and the retention of
certain key Reaganite, Thatcherite and even Mulroneyite reforms inherited
from conservative predecessors. The left claims less the ability to manage
the economy than to promote harmony amidst diversity and use government
edicts to solve a variety of national problems, ranging from the environment
to anything dangerous to "the children."

Although more successful than their contemporaries in Canada and Great
Britain, US conservatives in the Republican Party have been ill-equipped
to deal with neo-liberal political innovations. Republicans have been
unable to cope with Democrats presenting themselves as guardians of the
surplus and are generally impotent in the face of arguments that equate
defending traditional morality with attacking pluralism. On issues that
some commentators summarize as the "national question," ranging
from sovereignty to immigration policy, even conservative Republicans
are often hesitant to assert themselves.

It should thus come as little surprise that the Constitution is seldom
consulted when new expansions of federal power are considered, as it has
been hijacked by ideologues offended by Christmas trees. If the revival
of patriotism and other trends hospitable to traditionalists following
September 11 presents opportunities for conservatives, few have shown
any indication they know how to take them.

This doesn't mean that 2002 spells doom for Republicans. A few isolated
off-year elections may not be representative of any meaningful national
trend. During the 1990s, we saw the Republicans' 12-year lock on the presidency
broken in one election cycle, followed by the end of the Democrats' 40-year
domination of the House of Representatives in the very next election and
then saw a Democratic president win a second term for the first time since
1936 and a Republican Congress reelected for the first time since 1928
in the same election cycle.

Who in 1995 would have predicted that on the eve of 2002, Newt Gingrich
would no longer be in Congress but Strom Thurmond would, or that Donald
Rumsfeld would hold a high government position but Al Gore wouldn't?

Syndicated
columnist Deroy Murdock recently rattled off the accomplishments of outgoing
New York Mayor Rudy Giuliani: a 57 percent drop in crime, a 65 percent
reduction in the homicide rate, a 53.4 percent decrease in public-assistance
rolls and the abolition of a 20 percent minority set-aside program. Municipal
employment fell 17.2 percent overall even though 12 percent more police
officers and 12.8 percent more teachers were hired. City-owned apartments
were cut by 70 percent and many city assets were privatized. Giuliani
cut or abolished 23 taxes, including a 21 percent cut in the city income
tax. He held annual budget increases to 2.9 percent while his fiscal 1995
budget and fiscal 2002 forecast actually decrease nominal spending.

These accomplishments are worth repeating not simply as another tribute
to Rudy. They are a testimony to the effectiveness of conservative ideas
when promoted by officials willing to implement them. Giuliani governed
a liberal city where Democrats outnumbered Republicans 5 to 1 among registered
voters and 45 to 6 on the city council. And he was no flaming right-winger;
consider that everything Murdock mentions was accomplished by someone
frequently criticized by conservatives for being too liberal, a mayor
elected with the support of New York's Liberal Party just like the last
Republican mayor before him, John Lindsay.

Tempting though it may be to make predictions, politics in recent years
has been stubbornly unpredictable. Perhaps a more productive enterprise
would be to seek opportunities and seize them.